THE Finance Secretary backed the move claiming now is the time to move on from pay freezes and focus on moderate growth.

JOHN SWINNEY has defended his 1per cent public sector pay cap and rejected calls to introduce means testing for universal benefits such as free bus passes and prescriptions.

The Finance Secretary was dubbed "George Osborne in a kilt" by the PCS union for introducing the same "woefully inadequate" pay cap as the UK Government in the Scottish budget.

But he told BBC Radio Scotland's Good Morning Scotland programme that the Scottish Government "is not following the strategy followed by the UK Government at Westminster".

He said: "In the UK under the Conservative and Liberal administration, there is no guarantee of no compulsory redundancies for public sector workers covered by the Government remit. There is no provision for a living wage which protects people on lower incomes in our society.

"What the Scottish Government has done is provide a remuneration package for public sector workers which acknowledges that fact that there have been clear strains felt by public sector workers, given the pay freeze over the last couple of years."

It is up to councils to decide whether to award their staff a pay rise this year, but the Government "made the point to the wider public sector that it's time to move out of the pay freeze period and into a period of modest growth", he said.

Mr Swinney also rejected criticism that he is giving "free bus passes and prescriptions to millionaires" by refusing to introduce means testing for universal benefits.

Universal benefits form part of the Government's preventative spending agenda, paying money in now to prevent more costly health problems in the future, he said.

"If you take concessionary travel, for example, what that helps to do is to keep senior citizens in our society more mobile, more able to get out, more social interactive.

"What you have to wrestle with is that if you want to put in place all of the means-testing infrastructure of these schemes, you end up ratcheting up the administration costs of some of these schemes. It wouldn't save money. What it does is put in a complexity to these schemes which increases the costs and undermines the value of these schemes."

Labour finance spokesman Ken Macintosh backed universal benefits, saying they have made "a huge difference to so many people across Scotland".

But he cast doubt on whether the 1% pay rise would help the 16,000 people he said are earning below the living wage.

"These are the sort of areas we should be focusing on, being sure that those on the bottom are not working on poverty wages," he said.

He said: "We simply cannot afford to go back to inflationary rises at this stage and if we did the cost of that would be more jobs lost."

Liberal Democrat leader Willie Rennie said the "modest increase" is "the right thing to do" because "these are really challenging times. We've got to try and live within our budget and focus on where we can have the biggest economic impact".